Political institutions and corporate debt maturity

Abstract

We investigate the impact of political institutions on corporate debt maturity. Using the universe of non-financial firms from 79 countries covering the period from 1987 to 2007, we find that sound political institutions are positively associated with corporate debt maturity. The evidence is robust to different political institutions proxies. Our results have broad implications for firms since the debt maturity structure of a firm can affect its’ investment decisions to a great extent.